Monday, June 13, 2011

B&H better off without Turkish Airlines

Financial auditor blames Turkish Airlines for B&H losses
Bosnia and Herzegovina’s financial auditor has concluded that the country’s national carrier, B&H Airlines, was better off before Turkish Airlines purchased 49% of shares in late 2008, noting that the airline should either declare bankruptcy or urgently receive a cash injection. Since Turkish took over B&H, losses have increased 10 times and the result of the sale has been an utter failure, the auditor included in its report. In 2008, before Turkish took control over the company, the airline had a loss of just over 1 million Euros. In 2009 that figure increased to 6.2 million and by the end of last year B&H had accumulated debt of up to 22.9 million Euros, a significant figure for such a small company. The auditor continued its scathing attack on Turkish Airlines’ (mis)management of the airline stating that in the past 2 years B&H operated aircraft that were not suitable for the airline and constantly launched new routes which led to an increase in losses. Furthermore, due to low passenger numbers, the airline suspended 5 routes in the past 2 years.

On the other hand, former B&H Airlines CEO Nudžeim Rečica says that the airline would have gone further downhill hadn’t Turkish purchased B&H’s shares. He underlines that the entire aviation industry had suffered over the past 2 years due to the effects of the global financial downturn. He also admits that there have been some problems in the implementation of Turkish Airlines’ strategy at the Bosnian national carrier. Bosnia’s Ministry for Communication and Transportation believes that things at B&H will pick up after Turkish names its own people to head the carrier.

Turkish Airlines is expected to name B&H’s new CEO soon, possibly by the end of the week. The airline currently operates services with 3 aircraft, 1 Airbus A319 and 2 ATR72s although one of the latter is expected to be phased out soon. According to the purchasing agreement, Turkish Airlines is required to provide another jet engine aircraft for B&H to use. There is some good news for the national carrier as it is reporting an increase in passenger numbers compared to the same period last year.

18 comments:

  1. Looks like the Bosnian Government is playing the blame game here. Like people say, history repeats itself, Air Bosna = B&H Airlines.

    Turkish Airlines might be able to bring a stabilized operations and network to the carrier who has been dropping routes like flies!

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  2. I am having a hard time seeing why TK would be to blame. After all they were not the one in charge but governmental officials. What TK did is to provide financial injections believing that people in charge were competent and would wisely use it. Instead what BH Airlines had is bunch of incompetent people that were not able to understand peculiarities of aviation industry and kept dreaming that certain routes would be profitable without any proper analyses.

    Actually these kind of people are not limited only to aviation industry but endemic through whole Bosnian society - Trebinje Airport, 10 years earlier there was Visoko airport with its 2m pax and finally there were going to be more than 1000km of motorways in smaller Bosnian entity.

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  3. @Zrak

    Do you really think the people saying these dreams believe them? If they do then that is really scary.

    My opinion is that they talk of these grand projects to get votes and also get money to conduct studies on feasibility. So for Trebinje they spent 10 million dollars on research and I am sure someone got a nice pile of cash from that. The biggest problem is that there is no accountability in Bosnia. Few people get fired for being incompetent and many people get jobs due to political party affiliation.

    People claim that in SFRY you had to be a party member to have a good job, but what has changed except for the party names?

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  4. LOL! So financial state of JA is now TK's fault?? I'll keep it simple, there are two possible situations at JA:

    1.) TK's executives not present in JA's management. If this is the case than there's really not much to say. Let's just have a look at the A319 they received from TK. TK gave them an aircraft which is very expensive if they can't fill or utilize. Low utilization, poor marketing (at least advertising) and no knowledge about codesharing are trademarks of JA's management. Those guys wouldn't be able to run a grocery store, not to mention an airline... So yes, TK really might be the one to blame. It's like giving a golden watch to a hyperactive boy and thinking he's going to change suddenly and take care of it for some reason. Not gonna happen...

    2.) TK's executives present in JA's management. Now here are two possibilities. TK's executives either can't run an airline, which is actually impossible, or they are doing their best to increase loss. This is quite possible. They will run the company down to the point where the government of B&H will beg anyone to just buy their 51% stake at JA for 1€. TK now takes over, and JA suddenly becomes profitable (surprise, surprise).

    As long as TK is interested, JA will not face bankruptcy...

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  5. The plan is that Turkish airline operate one 1 destination: Sarajevo-Istanbul, and connect Bosnia with the rest of the world ¨only and only¨via Istanbul, therefore they would increase passengers number on mother company Turkish Airlines.. such a shame.. Dont like!

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  6. CistRacunDugaLjubavJune 13, 2011 at 6:11 PM

    @ last anonymous
    I does not make sense what you're suggesting and I don't believe that's what THY wants to do in SJJ. Why would anyone in their right mind want to travel to IST and then continue to, say, ZRH. First of all, it will be a lot more expensive and, second, you will waste a whole day. I don't think THY are that stupid.

    Sure, THY aims to get a lion's share of Bosnian long haul air travel to go through IST, but regional network is a different beast.

    The blame game will continue until either THY takes over the airline or withdraws altogether. You need to know clearly who's in charge and where does the buck stop.

    2.
    Guys, I've seen a number of you mention a number of times the sites (Amadeus etc.) you use to check air fares (and timetables etc.). Could you advise me what site I should use to check fares for intercontinental travel, please? I use kayak.com but I am wondering whether is better option out there.

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  7. The thing is, Bosnia is such a small market that I don't see a lot of potential there, at least not at the moment. Current air travel is composed mostly of the diaspora visits during summer months and extended holidays. There is very little tourism and even less business travel. Like it or not, Bosnia's growth and development is highly dependent on its neighbors Serbia and Croatia. Only healthy and stable environments in Serbia and Croatia are a warrant for prosperous future and stability of Bosnia.

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  8. Turkish Airlines HQ via Mustafa Aydin and Okan Uluocak( ex JA management, still involved in transition period) equals as title "B&H better off without Turkish Airlines"

    All recent cancellations, were decided by THY, including FRA and VIE total cancellation. JA is in total comand by THY and looks like, as mentioned before, by anonimous, that they will only operate IST directly and VIA further. shame shame

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  9. I guess this is a hard way to learn the lesson not just for Bosnia, but all ex YU states that unless you start thinking yourself and taking care of your "house", don't expect someone else will. The mentality of our people needs to change and stop expecting foreigners to clean up our mess and rescue us from misery. Why does everyone think that anything that's foreign is better than ours. We have potential, we have smart people too. I just wish everyone could forget politics and focus on real issues that are keeping us behind

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  10. Well, this happens when politics dictate business. In a normal surrounding, nobody would invest in BH Airlines, because this airline is full and full of party members and corruption. Will never make a cent of profit. But in the Balkans one big power (Turkey) tells their national carrier (state owned THY) to invest in BH Airline to make Mr Erdogan happy.

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  11. Facts:

    1. THY can't purchase more than 49% of BHA because of domestic Turkish laws.

    2. THY was blocked for more than 12 months in BHA, when internal opstruction started

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  12. Hmmmmppph...don't tell me Bosnia and Herzegovina doesn't have tourism! After Croatia and Slovenia, BiH comes third in the former Yugoslav region, with 3.5 million tourists anually! Just look at Medjugorje, the Visoko pyramids, Sarajevo and the mountain villages around, eco and adventure tourism, old town of Mostar, Strbacki Buk, the Una river and the Tara for rafting, Bijeljina's ethno village, Banja Luka's famous parks and gardens, plus the amazing architecture, ancient cultures and the rich, hearty cuisine! Nemoj ti meni govoriti kada nemas pojma!

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  13. @ last Anonymous

    What country doesn't have parks, gardens, architecture and ancient cultures??? If "burek and cevap" are the synonyms for a hearty cuisine then God bless you. It's good food but nothing I cannot find in other countries....and don't even start with those pyramids. What a hoax!
    The only two places in Bosnia that currently attract some tourists are Sarajevo and Mostar. The country has beautiful mountains but there is no infrastructure in place. Urban planning and littering like in many other places in ex YU are a big issue. People dump their trash straight into rivers and woods. Zoning and urban planning are non-existent. Everyone is allowed to put and build their home wherever and however they want. I could go on and on. I am Bosnian by the way, so you don't think this is coming from a Serb or Croat. Prvo da pometemo pred svojim pragom, pre nego kazemo nesto za druge.

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  16. @Sam

    Bosnia actually has a decent amount of tourism for river rafting, hiking, etc. and that is what is considered eco-tourism. There are many tourists that visit.

    There is potential for a great tourist industry, but advertising and promotion are nearly non-existent. The airline seems to have made no effort to partner with tour companies and travel agents. It should not be a chore to book a flight. This whole Turkish Airlines involvement has me skeptical because they haven't even come up with a decent inviting website for B&H. Booking is as bad as on Malev's site.

    You are right that we (all ex-yu countries) need to start cleaning house and stop looking at foreign companies as godsends. We would do better by cooperating between us rather than tearing each other down at every turn.

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  17. Hi E,

    I completely agree with you. My comments were not meant to attack anyone but more to bring the attention to those issues, so it can be fixed. I don't disagree that Bosnia doesn't have tourism potential. On the contrary, there is a lot to offer but without proper infrastructure, educated people and stable political environment it is going to be very hard to attract tourists. It makes me sad to see that more than 15 years after the war, the nationalistic rhetoric still hasn't changed that much. When even Albania, once considered the poorest European nation, is more advanced than us, then there is really nothing else left to say.

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